You've probably heard of Neo-banks. Meet the Neo-lender. Proportunity, a London-based Neo-lender, is one of the most recent. Proportunity, based in London, has raised $150m in equity and debt funding rounds ($7 million equity financing, $143 million in debt) and its $10m debt round for 2020.
VentureFriends, Kibo Ventures and existing investors Anthemis and Entrepreneur First, as well as new UK investors Amro Partners, led the round. This funding will be used by the startup to expand its team and increase its maximum loan amount from 90,000 to 150,000 per house.
Around 85% of UK renters want to own their home but are unable to due to high deposit requirements and rising house prices.
Proportunity claims it offers home buyers a home equity loan similar to the UK government's Help to Buy scheme. It is available for all homes, not just new ones. They can afford homes with a 5% down payment, which reduces the amount of savings they have to save. Proportunity offers a pro bono equity loan up to 150,000, or 25% of the property's price. This is in addition to the maximum mortgage they can get from a traditional lender. They can borrow up to six times their income through the equity loan and mortgage.
This is possible thanks to machine learning, which helps identify homes of fair value in high-potential growth areas. It also de-risks lending and removes the need for large deposits.
Vadim Toader (CEO and co-founder) stated that there is a gap of 100-200k between what buyers need and what they can afford in the UK. This is due to lenders restricting their lending to a maximum 4.5x income and high deposit requirements. This is combined with rising house prices and the need to have an additional bedroom in the new work-from-home environment, and it's easy for buyers to see why they are losing.
VentureFriends partner George Dimopoulos stated: Proportunity was a product that can positively affect the lives of thousands FHBs.
Proportunity is competing with three major competitors: Generation Home, a new twist on guarantor loans that mainly helps to structure financial assistance from family and friends. Wayhome, also known as Unmortgage, is a private form of shared ownership that combines renting and a mortgage deposit.
